Foundations: Market Structure & What The Heck Just Happened
Michael Burry
· Cassandra Unchained
· July 31, 2026 at 21:02
· ⏱ 4 min read
| Read on Substack ↗
Summary
The article argues that the S&P 500's 2011-2026 returns depended overwhelmingly on earnings growth because dividend contributions were historically negligible, which makes earnings quality and permanence the central market risk. It also argues that stock market resilience and volatility dynamics have shifted in ways that may not match historical assumptions.
•From 2011-2026, the S&P 500 produced a 12.09% annualized real total return, but dividends contributed only 1.76%, ranking at the 1st percentile across all 15-year blocks in the last 145 years.
•The article claims buybacks and RSU withholding taxes are real cash uses that compete with dividend policy, effectively replacing dividends with employee compensation that does not show up in earnings or typical free cash flow calculations.
•Earnings growth was the dominant contributor to the 2011-2026 return, making the quality and permanence of earnings the key long-term question.
•The author describes the current market as 'resilient like no other market in history' despite stockholders receiving relatively little in actual dividends.
•The article invokes the GJR 1993 volatility framework, distinguishing omega (baseline nervousness), beta (fear memory), alpha (reaction to big moves), and gamma (asymmetric fear of losses).
•Fischer Black's 1976 observation that stocks get more volatile after falling than after rising is cited, and the article concludes the dynamics of market resiliency have changed substantially.